Thursday, March 26, 2009

Budget 2009

Here are the budget highlights, here are the actual estimates.

EDIT: And here is the budget thrown into wordle.

Firstly, I highly recommend that you (at least the Newfoundlanders) take the time to poke through the estimates, at least the first 18 pages. They're almost distressingly readable. I don't expect this level of clarity in any financial document, let alone a provincial budget.

This is what oil prices and Ottawa do to Newfoundland:
2008-09 total revenues: $8,069,353,000
2009-10 total revenues: $5,348,371,000 (estimated).

I have no solid knowledge of the ins and outs of the equalization agreements with Ottawa, one practically needs a degree in the subject. But it's a big budgetary hole to fill, which is where the $750m deficit steps in. Of that 5.35 billion or so, 1.26 billion stems from offshore royalties; the budget estimate is $50/bbl.

We paid $146,508,000 into equalization, or approximately $300 per Newfoundlander (but still win in terms of provincial side deals, with triple that coming back from the 1985 Accord).

It will cost $24 million to run the legislature this year - up 20% from last year's $20 million. Should I expect news stories about this? Education spending is also up 20% from last year.

Government is spending a quarter-billion on something called "resource development". Any ideas what that is?

Servicing the debt still costs a half-billion a year, but this has got to be a monumental improvement relative to a few years ago when we had $4billion more in debt and interest rates were considerably higher.

It should be made clear that we're having a party on the back of the oil money. I hope that it doesn't end, but that's unrealistic. It's an excellent party, and we're even being fairly responsible about it by taking some good chunks out of the debt. But the level of spending growth is way, way unsustainable and barring a ton economic development somewhere outside the oil patch, it will eventually come home to roost in the budget. That could easily be twenty years down the road, which is a long time, but I feel like it would be pretty inexcusable to leave the oil patch behind with a provincial debt still on the books.

2 comments:

Simon said...

If you mean the 228M (or so) then you are talking about more money into Nalcor, the state energy company, to pay off all those equity stakes bought at the top of the market.

Andrew said...

Ah, thanks. Makes sense, though I remember when I heard about it, it was priced rather lower.